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Billionaire sells all Netflix stock, accepts $400 million loss

Investor William Ackerman sold 3.1 million Netflix shares for a loss of $400 million even though he bought it 3 months ago.

Investors paid more than $1 billion to Netflix in January as the stock fell on expectations of lower subscriptions. However, shortly after Netflix reported losing 200,000 subscribers in the first quarter, he had no hesitation in rejecting the company he had cheered a few weeks ago. Billionaire Ackerman’s Pershing Square Capital Management Fund “turned a profit.” “The urgency came after the streaming platform reported its first subscriber drop in more than a decade. When the market fell 35%, the fund sold 3.1 million Netflix shares to $226.19, a loss of more than $400 million.

Billionaire Ackerman said in a joint statement that Netflix’s proposed business model changes, such as integrating advertising and strengthening password sharing between households, make the company unpredictable.

“While Netflix’s business is understandable, as a result of recent events, we have lost confidence in the company’s ability to accurately forecast future prospects.” Ackerman said Pershing Square bought more than 10 companies at a time and Requires its portfolio to be “highly predictable”. Rather than wait for Netflix to improve, Ackerman lost more than $400 million.

Hedging helped Pershing Square survive the early days of the Covid-19 pandemic and has grown in recent months as interest rates have begun to rise. The past three years have been the fund’s best three years, with a 70.2% increase in 2020. Still, Mr. Ackerman acknowledged that he had learned from the tough times the fund had invested in Valeant Pharmaceuticals. , the wrong choice cost the fund billions of dollars.

“One of the lessons we’ve learned from our past mistakes is to act quickly when we find new information about an investment that doesn’t match our original thesis. That’s why we’re doing this (selling Netflix stock),” said The Billion. Millionaire wrote in the announcement.

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